I did not find any bugtracker tool on the site
(I was at an XML conference this weekend in London and actually was surprised not to meet any of the basex guys there, I could have asked)
anyway, you could try baseX talk
basex-talk(at)mailman.uni-konstanz(dot)de.

If you want to accept your own answer (a bit inappropriate here actually) make sure it contains a solution. 'win 7 command-line related' is too vague.

Note I confirmed it is a bug and it should not return values, that on its own is an acceptable reassurance

What did baseX reply? What exactly is the command-line related issue? How can your accepted answer help others that run in the same issue?
If you pasted the XPath in a file and it works ... it still could be a baseX issue, them doing the wrong thing with windows command lines. Still they should look into it. I can imagine that they parse out the command line the wrong way

According to Microsoft about NT command shell:
" all reserved shell characters not in double quotes must be escaped. These characters have special meaning to the Windows NT command shell. The reserved shell characters are:
& | ( ) < > ^
To pass reserved shell characters as part of an argument for a command, either the entire argument must be enclosed in double quotes, or the reserved character must be escaped. Prefix a reserved character with a carat (^) character to escape it."

In the command-line that I tried it likely ignored the "^" in the regular expression considering it just an escape character of the following character. This is why it always matched no matter where I put that "^".

yes and it worked but it was becoming too difficult to consider the various special characters in a XPATH to escape them automatically.
Added to the possibility to reach the command-line length limit, I preferred to avoid the problem :)